Describing China as Islamabad’s “most sincere friend”, Pakistan Prime Minister Shehbaz Sharif said Beijing’s diplomatic and financial support was crucial in his country getting the IMF loan.
On March 26, the IMF staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout programme.
Pakistan’s financial situation has deteriorated considerably over the years, with its foreign exchange reserves dwindling sharply, often making them ineligible for meeting the IMF’s demands for loans due to lack of reform in various sectors.
However, timely loans from China have helped Pakistan in taking loans from bodies such as the IMF, World Bank, and Asian Development Bank.
Last month, China extended the repayment period of a $2 billion loan to Islamabad by one year, offering much-needed financial relief and helping stabilise Pakistan’s critically low foreign exchange reserves, according to Dawn.
The government is currently working on strengthening its finances after securing a $7 billion IMF bailout in September 2024. Pakistan reached a staff-level agreement (SLA) with the global money lender in March after a successful review of the first installment of the loan.
Chinese Ambassador Jiang Zaidong said Chinese President Xi Jinping always attached great importance to the relationship with neighbouring countries.
Under the China-Pakistan Economic Corridor, China had made a direct investment of US$35.4 billion, “reflecting the strong relationship between the two countries”, he added.
The China-Pakistan-Economic-Corridor is beset with structural corruption and the deteriorating security situation has consistently derailed the projects under the mega initiative.
